Eric Ries and the Origins of the Lean Startup Theory—The Full Xconomy Interview

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Will thought that testing his vision would be a way to destroy it. Which it kind of was. I know a lot of people like that. Data has a really bad name in managerial circles. A lot of people use data to puncture a vision. But we found a way to say, “Let’s use data to discover which parts of the vision are correct and which parts are crazy and discard the crazy ones.” I wish we had done it better at IMVU, but now we are really on the same page about what that means and now I can talk to visionaries in a way that makes them feel really heard. And convince them to do this thing, in addition.

X: Okay, so what’s your definition of crazy, and how do you discover what parts are crazy?

ER: In the book, I draw this simple pyramid. If somebody had shown me this 10 years ago, the last 10 years would have gone really differently. It’s so simple. Vision, strategy, product. The foundation is vision. Vision is where you want to go. It’s the destination you program into your GPS. Strategy is the route; let’s do this combination of actions and that will get us there. The product is the pointy edge of the spear where you say to customers, “Here, be part of my strategy.”

Changing the product is like what you do every day. It’s optimization. It’s just driving. Sometimes, when you change the product, you will discover an obstacle. Oops, customers won’t download the damn thing, like we learned at There the hard way. That could just be a speed bump. You don’t give up, you just go around. But when you try to go around, sometimes it says No Left Turn. Uh oh. And sometimes you find out that you were just wrong about the whole strategy, and you can’t get there by car, you have to go by boat.

Changing your strategy is a pivot. Still, the vision hasn’t changed. The vision is we are still going to get to New York City. We are just going to go by a different mode of transport. That simple framework is, to me, what this is all about. That it’s okay to discard strategies occasionally, and of course you discard the product every day, when you change it. That is a normal, natural thing.

X: But if you pivot enough times, if you change the strategy enough times, you might find out that not only are you going by boat instead of car, but you are going to a totally different destination that has nothing to do with the original vision.

ER: That’s right. And that can be a good thing or a bad thing. Usually it’s a bad thing. When entrepreneurs seek me out now for advice, I would say 30 or 40 percent of the time, my questions are all vision-related questions. Oftentimes what will happen if people set off in a certain direction, and they find out they can’t make any money, so they say “Oh look over here, it’s some free money, let’s go over there.” If you look at the Groupon story—I don’t know it all that well, but there are some pretty significant pivots in there, and I think they have really gotten in touch with the vision of where they are headed now. At the end of the day, their vision is fundamentally about this collective action. There is a certain thread that connects it. It wasn’t just “Let’s go make a quick buck and to hell with it.” And so sometimes you discover what your vision really is through difficulty.

Here is what I love about entrepreneurship. It is actually a process of self-discovery. Because when you write your vision down for the first time, you think you know everything about it. But when push comes to shove, when life makes you choose between different elements of the vision, you actually discover something you didn’t know before, which is that actually not all the parts are equally important. Certain things are just part of the strategy and you don’t actually care about them at all. At IMVU we used to talk about people hanging out with their friends online. That was part of our mission statement. When it came out that customers did not want to do that behavior—that what they wanted to do was make new friends online—we could have gone one of two ways. We could have said, “No. We don’t care about that. We are about the online hangout. So if the avatars are getting in the way of the online hangout, to hell with the avatars. We are going to go create Google+. Or some new thing.” But when we actually had that experience, we realized that we don’t care. Hanging out with other people online seemed like a good way to describe the benefits of avatars. Avatars are mediated communication. If customers think this other thing is better, okay, we’re happy to make that pivot. We realized that certain things we used to think were essential were just tactical choices. We could let go.

It’s hard to know where in the pyramid your ideas are until you test it. That’s the cool part about it.

X: Okay, I get that. But I wonder whether you think people learn as strongly from small failures and pivots as they do from bigger failures. Part of your methodology seems to be about helping people to fail in small ways. That’s what a pivot is, right? You figure out that this direction wasn’t working so you try an adjacent direction and see if that works. But wouldn’t they potentially learn more if they took the risk of a more substantial failure?

ER: I’m hesitant to embrace that idea. Large and small are relative terms. A lot of people just get stuck in an optimization trap. They test a lot of small stuff but they are not really putting their fundamental beliefs to the test and therefore they can never pivot. In the book, the thing I’m most proud of is that … Next Page »